More provinces to join debt spree after deal

Salta’s Urtubey becomes latest governor to confirm intentions as Peronism also jumps in

An increasing amount of provinces are confirming their plans to dip into international debt markets a week after Argentina issued its first global bonds in 15 years.
Salta Governor Juan Manuel Urtubey is the latest addition to the list. In an interview with Radio Mitre, the conservative Peronist said his province was planning a US$250-million bond sale to “finance infrastructure investment plans for production and services.”
That means Salta joins a long list of provinces with struggling finances that are resorting to local and foreign financers to boost their coffers.
Administrations aligned with President Mauricio Macri — such as those in Mendoza, Jujuy, Buenos Aires City and Buenos Aires province — are ready to issue new debt, and the same is true for Peronist districts such as Chaco, Entre Ríos, Tucumán and districts ruled by other parties such as Santa Fe and Neuquén.
Urtubey will likely find little opposition to the proposal in his legislature. But the governor is also betting that his improved relationship with the national administration will help him boost the province’s coffers, as many governors push for a renegotiation of cash revenue distribution to the provinces.
Urtubey was vocally critical of Cristina Fernández de Kirchner’s administration during her last months in office, arguing that she controlled resources too centrally and only gave provinces some relief if they alligned completely with her wishes.
The governor has been more amiable to the new administration “I hope Macri does well, because if he does well, Argentina will do well, too,” Urtubey said soon after the new president took office.
His words yesterday seemed to indicate no change on that front.
“I think Peronism has to support the public policies that the government proposes and that help us grow as a country,” Urtubey said.
His criticism continued to be focused on the former president, instead, as he said her supporters’ rally in front of the Comodoro Py Courthouse was “a thinly-veiled move to put pressure on one of the State’s branches, and an imprudent thing to do.”
Macri on board
The local authorities are following Buenos Aires province’s footsteps, where María Eugenia Vidal’s government already raised US$1.25 billion in March, before the national administration.
Vidal paid an interest rate above nine percent for that issue, and is now planning a second one, according to the La Nación daily.
Analysts say interest rates could improve for BA province after the country paid its way out of default last week, but other districts are still likely to be charged massive interests.
In some cases, such as Chaco and Jujuy, raising debt abroad will prove impossible even at high rates, as the provinces don’t have a track record in the market or important assets to offer as collateral.
As a consequence, the governors plan to turn to the local market. Domingo Peppo obtained an authorization from the Chacho legislature to raise four billion pesos on Wednesday, while Gerardo Morales wants to raise 3 billion pesos to complement the aid he’s been receiving from the national Treasury.
Finance Minister Alfonso Prat-Gay and Interior Minister Rogelio Frigerio are both happy with the governors’ plans.
Prat-Gay said on Tuesday that the federal government was not issuing as much international debt as it could because it didn’t want to dry up the market for provinces and private companies.
Frigerio, meanwhile, even reportedly lobbied Let’s Change lawmakers in Chaco to back Peppo’s debt proposals, in a bid to keep the provinces relatively free from turmoil and in line with Macri’s administration.